Where are the Cheap Firms Internationally?

Where are the Cheap Firms Internationally?

February 4, 2015 Chart of the Day, Value Investing
Print Friendly

Last week, Wes had a short post entitled, Where are the Cheap Firms?

The post showed that when we look at the cheapest stocks in the U.S. stock market, we see that a few industries predominate today, notably energy (mostly oil-related) and consumer discretionary.

We wondered what things looked like in developed international markets, but at a country level. That is, when we look at the cheapest stocks available worldwide, in which countries will we find the cheapest stocks?

First, what does the universe look like? We examine 1035 securities that are deep and liquid in the developed markets:



It is worth noting that Japan has many more tradeable stocks than many of these other countries.

Country weigths based on stock-selection using EBIT/TEV:



Norway, with a 6% weight, actually has a higher EBIT/EV yield (at 20.22%) in its cheapest decile than Japan (at 14.69%), it has many fewer stocks, and so receives a lower allocation versus Japan’s 55% weight. In general, the world’s cheap stocks reside in Japan.


How about another valuation metric? P/E:



A different story here: Japan has a huge weight, but Hong Kong plays a much bigger role.

What is “cheap” depends on how you define cheapness. However, some interesting bargain hunting can be found in Japan, Norway, and Hong Kong.

Good luck!


Note: This site provides no information on our value investing ETFs or our momentum investing ETFs. Please refer to this site.

*** ***

Join thousands of other readers and subscribe to our blog.


Please remember that past performance is not an indicator of future results. Please read our full disclaimer. The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Alpha Architect, its affiliates or its employees. This material has been provided to you solely for information and educational purposes and does not constitute an offer or solicitation of an offer or any advice or recommendation to purchase any securities or other financial instruments and may not be construed as such. The factual information set forth herein has been obtained or derived from sources believed by the author and Alpha Architect to be reliable but it is not necessarily all-inclusive and is not guaranteed as to its accuracy and is not to be regarded as a representation or warranty, express or implied, as to the information’s accuracy or completeness, nor should the attached information serve as the basis of any investment decision. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission from Alpha Architect.

About the Author

David Foulke

Mr. Foulke is currently a Managing Member of Alpha Architect, where he assists in business development, firm operations, strategic initiatives, and developing papers on quantitative investing and behavioral finance topics. Prior to joining Alpha Architect, he was a Senior Vice President at Pardee Resources Company, a manager of natural resource assets, including investments in mineral rights, timber and renewables. Prior to Pardee, he worked in investment banking and capital markets roles within the financial services industry, including at Houlihan Lokey, GE Capital, and Burnham Financial. He also founded two technology companies: E-lingo.com, an internet-based provider of automated translation services, and Stonelocator.com, an online wholesaler of stone and tile. Mr. Foulke received an M.B.A. from The Wharton School of the University of Pennsylvania, and an A.B. from Dartmouth College.